WASHINGTON — Four state and local groups sent a letter to the House Judiciary Committee ahead of a highly anticipated online sales tax hearing urging Congress to pass a bill that would allow states the authority to require out-of-state retailers to collect sales tax on goods purchased online.

The National Association of Counties, the National League of Cities, the U.S. Conference of Mayors and the Government Finance Officers Association sent a two-page letter on Monday to House Judiciary Committee Chairman, Republican Rep. Lamar Smith of Texas addressing the Marketplace Equity Act.

The bill was introduced last fall in the House by Reps. Steven Womack, R-Ark. and Jackie Speier, D-Calif. Similar legislation, the Marketplace Fairness Act, was introduced in the Senate by Sen. Mike Enzi, R-Wyo., in 2011.

The groups argued that the bill would put brick and mortar stores on a level playing field as remote sellers. They also said that main street retailers have a five to ten percent competitive price disadvantage to remote sellers.

“The Marketplace Equity Act would give state and local governments the option to collect the sales taxes that are already owed under current law from out-of-state businesses, rather than reply on customers to pay those taxes to the states when filing their annual state tax returns,” the groups wrote.

“Customers are already required to pay taxes when they make online purchases, just like when they make purchases in a store; however, most taxpayers are not aware of this responsibility, and states and localities do not have the resources to enforce payment,” they wrote.

Generally, states have been blocked from requiring Internet retailers overall to collect sales taxes by a 1992 Supreme Court’s decision, in Quill Corp. v. North Dakota. The court ruled that states can only require an out-of-state seller to collect taxes on residents if the seller has a physical presence in the state. The justices worried Internet retailers would become subject to differing state tax regimes

States will lose an estimated $23.3 billion this year by not being able to collect sales taxes from online and catalogs purchases, according to the National Conference of State Legislatures.

The groups outlined several concerns with the bill, including states’ ability to exclude local sales and use taxes from being collected. They suggested that the bill be amended to preserve the ability of local governments to maintain their own tax rates and impose those same tax rates on both remote and brick and mortar sales.

The groups also recommended that lawmakers take into consideration the Streamlined Sales and Use Tax Agreement that twenty-four states have already adopted. The SST Project was created in 2000 to help states adopt uniform standards for what is taxed across state lines so they could mitigate the Supreme Court’s concerns.

Separately, the National Retail Federation called on Congress to “address a loophole that allows most online sellers to avoid sales tax collection,” the group said in a release.

“We can’t allow an antiquated decision to unfairly disadvantaged Main Street in a time when it’s already fighting to stay afloat,” said Matthew Shay, NRF’s chief executive officer and president.

The committee is expected to hear testimony on Tuesday, July 24 starting at 10:00 a.m. from two panels. Womack and Speiers will make up the first panel. The second panel will feature Republican Gov. Bill Haslam of Tennessee, state Rep. Wayne Harper, R-Utah., Hans Kuttner of the Hudson Institute, Steve DelBianco from NetChoice and Joseph Henchman of The Tax Foundation.

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